Technicians at the Cushieri Skills Centre
Shawn Walker, owner of Bay State Anesthesia in Massachusetts, shares her top tips for how Scottish companies can distribute their medical devices and diagnostics in the US.
Finding appropriate distribution for medical devices in the United States can be daunting. The route to market is paved with uncertainty and complexity, compounded by a huge geographical area. It’s important to determine which distribution channel works best for your particular technology.
One of the biggest mistakes companies make when trying to enter the US market is signing their product away to a company with national distribution simply because it is easier and less time consuming than exploring the alternative. But how do you effectively do your due diligence in this area? Where to start?
1. Investigate all options for distribution
While commodity products may be well suited to a large distribution company, most innovative medical devices are not. Products that are high touch, transformative or require clinician buy-in are usually better served by direct representation, independent representative networks, independent medical distributors, or a combination of these. Investigate all options for distribution, including licensing your technology.
2. Be committed
Make sure that you’re committed to, and budget for, supplying your US distribution partners with the support your technology requires. This may include clinical support personnel, the establishment of a state-side warranty and repair centre, or a 24-hour call centre.
You may want to consider that it's possible to outsource these functions, which will probably be more effective than trying to manage everything from ‘across the pond’, with time changes and delivery delays.
3. Know your customers
It is your responsibility to invest in and provide evidence and marketing materials that reflect US buying behaviour. You may even have to alter the appearance or functionality of your device for the US marketplace. You must trust your distribution channel when it comes to knowing what drives uptake in the US and respond accordingly with whatever the US market demands - even if no one in Europe does it that way.
4. Choose the right partner
Hire a direct representative or agent to promote your presence in the marketplace. This is essential for branding, as well as for keeping the product 'on the plate' of your chosen distribution model.
5. Plan your pricing strategy
Have a reimbursement strategy for your product prior to product launch. Ideally, you should have reimbursement and a product that will withstand the robust value analysis process - a systematic way that most US hospitals evaluate technologies for purchase. At a minimum, you should be able to provide a sound cost analysis for your product.
6. Ensure your contracts are watertight
A well-written contract will drive business in the short, medium and long term. The US is a litigious society. Our contracts are longer and more complicated than what you are accustomed to signing. Your distribution partners are going to want to sign a contract that reflects US law.
Be prepared to offer exclusive, multiple year contracts with some form of buy-out in the event your company is acquired or goes public/direct. Tie exclusivity to performance, but agree to not set performance metrics until some reasonable amount of time (i.e. six months) has passed. Otherwise you could over- or under-estimate market size.
7. Ensure your tech meets US ‘buying triggers'
Access to clinicians is extremely limited and very tightly controlled in US hospitals. Additionally, the Affordable Care Act has moved buying decisions away from ‘physician preference’ toward the prevention of re-admissions, infections and the improvement of patient satisfaction. Make sure that your technology addresses at least one of these critical buying triggers, or you will be facing an uphill battle.
8. Attend trade shows
Identifying potential distribution partners can be a challenge, but start by attending trade shows and asking the people who stop by your booth what distributors they prefer to buy from. Find out what distributors your competitors are using. Identify distributors of allied products. Consult directories published by distributor associations by searching the internet.
9. Your distributor must be the right fit for your company
The first and most important questions you can ask a distribution candidate are, "Have you ever successfully brought innovative technology to market before? Were you able to bring it to standard of care?"
If the answer is "yes," make sure you qualify that they were successful with technology that was truly innovative. Ask "What was the technology?" and "Can you give me more examples?"
10. Don't treat your distributors as a shelf
Your best distributors will want to partner with you on every level. You can expect them to provide:
- A level of service that encourages long-term loyalty on the part of the customer toward your company and its products
- Attendance at trade shows
- Prompt payment of all financial obligations
- Best efforts to achieve market share and other sales goals in a specific geographical or other area of responsibility
Despite performing these functions to the best of their ability, your product may not move off the shelves as quickly as anyone would like. Don’t require your distributor to take on unrealistic levels of inventory when you know that market forces, versus lack of effort, have prevented success.
Want more advice on how to get your medical device into the US? Our market and industry experts can offer practical guidance to help you get your product in new markets.
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